undertakings of all kinds. That was the time when large operations were made in the Stock Exchange by fictitious sales and purchases of shares. Finance and industry alike rose to a high pitch of excitement. But whence this great excitement? Was there any solid reason for expecting so sudden a revival of trade? Was the population of Europe, Asia, Africa, or America, richer and better than they had previously been, to warrant the expectation that their requirements would be so much greater? Had capital been amassed to such an extent, so as to admit of such vast engagements? Could the high prices be maintained? Would consumption continue at the same rate, notwithstanding the increased cost of every necessary and luxury of life? Alas, there was no real reason for entertaining any such hopes. The United States were yet suffering from the disastrous effects of the civil war. France and Germany had just emerged from a severe and costly conflict. Austria and Italy had their finances paralysed and their currencies at a heavy discount. The harvest had been bad in England for many a year. A great inroad was made on the accumulation of capital, not only by war but by the visitations of Providence in famines and cattle plagues, also by losses in loans to countries which had not the remotest possibility of repaying them, and by wanton luxury among all classes of society. The activity of trade now experienced was the result of the inflated condition of the United States of America, still basking under the deceptive sunshine of an abundance of paper currency. It was produced by the exaggerated expectation in Germany from the large indemnity exacted from France. It was fostered by the desire of the French to retrieve the past by increasing industry and production. With coal at 428. per ton, and iron at 107. per ton, many public works were suspended, and the general consumption of most articles was necessarily reduced. And it needed not much foresight to prognosticate that the fervour and sanguine expectations which for a time buoyed up the principal operators would in a very short time give place to alarm and despair.

Nor was it long ere the reaction manifested itself. The railway speculation in the United States first showed symptoms of weakness. Next came a complete crash in the Vienna Exchange. The crisis at Vienna brought about a similar fall of securities in Breslau, Leipsig, Frankfort, Hamburg, and Berlin. M. Max Wirth calculated the fall in value of the principal securities at the Berlin Exchange to have amounted to 131,138,000 thalers. Next came a crisis in the United States of America, where numerous bankruptcies took place. And soon after many of the South American States made default in the payment of interest and sinking fund on the loans contracted by them, causing serious losses to the unfortunate bondholders. From a return presented to the Royal Commissioners on the London Stock Exchange, it appears that out of a grand total of loans taken in London amounting to 614,228,300, the percentage of loans where all the obligations were fulfilled was

45-89, and where they were in default 54-11 per cent. The total sum in partial and total default was 332,399,500l. In course of time England participated in the reaction, and trade, which for some years made unprecedented progress, began to stand still and retrograde.

In the history of British commerce periods of commercial depression are by no means rare. In 1810-11, in 1839, in 1847-48, in 1857-58, in 1866, considerable distress prevailed from a sudden and protracted suspension of the ordinary activity of trade and industry, in former years, indeed, much aggravated from the scarcity and dearness of the necessaries of life. To a commercial nation like England a prolonged depression of trade, involving a falling off of every branch of trade, in imports and exports, manufacture and shipping, money and banking, in short, in all and every operation of commerce and finance, is a serious evil, for at such time there is less doing in everything, less employment, less activity, less work, less wages, and everyone is less engaged than he once was. We may well conceive that the sugar trade may be depressed whilst the corn trade is in full activity, that the iron trade may be reviving whilst the cotton continues in a very low condition, but a general depression of trade is a much more serious matter. Less and more, however, are comparative terms, and the soundness of our conclusions respecting the extent of such depression will depend on the standard by which we compare the same, or on the reasonableness of our expectations. To compare a year of excitement with an ordinary year is evidently erroneous and deceptive. In 1872, the exports of British produce and manufacture from the United Kingdom amounted to 256,000,000l. In 1878, they amounted to 192,000,000l. But the year 1878 was a year of speculation, when the prices of the principal articles were enormously high, and when most sanguine expectations were formed from the restoration of peace between France and Germany, quite regardless of the exhaustion of forces and wealth produced by that and other wars in Europe and America within a short time. A depression from that time of extreme activity might well have been expected. Single years, moreover, do not afford a safe basis for measuring the progress and exact character of trade. They are useful as landmarks, but their evidence is incomplete. A safer datum is the average of five or ten years. There is always an advantage in taking a number of years, in that the average result is freer from the exceptional circumstances of any single year. Take the average amount of the exports of British produce in the five years from 1869 to 1873, and from 1874 to 1878, and you find, that whereas in the first quinquennial period the average was 224,805,000l., in the second it was 211,000,000l. Too much is also made of the value of our imports and exports. The quantities of produce and

manufactures would better indicate the extent of international exchanges, for the values are subject to great fluctuations, and as they are obtained in a loose manner from the declarations of shippers and consigners, they must be taken as representing only generally the real amount of shipments. Compare the quantities and value of the four textile manufactures, iron and steel, exported in 1872 and 1878, and the results are widely different.

In quantities the decrease was only 3 per cent.; in value it amounted to 29 per cent. Upon a careful examination of the statistics of quantities, it will be found that the greater portion of the foreign commerce of the United Kingdom is subject to comparatively small fluctuations, and that any excess of speculation arising in any one year is soon corrected by the return of a more sober and more correct appreciation of the wants of the people at home and abroad.

A singular fact in connection with this depression of trade was the continuance of an extensive importation of foreign and colonial products, in the face of a reduced exportation of British produce and manufacture, thus creating what appeared to be an excessive balance of trade against England. The value of the imports of the United Kingdom is generally greater than the value of her exports, but never was the excess so large as in the four years from 1875 to 1878. From 1855, when the real value of imports was first ascertained, till 1878, the average value of imports and exports was as follows:

An excess so considerable gave rise to much anxiety, lest it should be an evidence of a state of trade disadvantageous to the